While Competitors Sold, Greycourt Plotted a Succession—With Family Offices in Mind

In recent years, Matthew Litwin, CEO of Greycourt, the investment consulting and management firm, has gotten many calls about his company from people wondering, “Have you considered selling?”

Larger consulting and outsourced chief investment officer firms have always spied out opportunities to acquire smaller competitors. Today, wealth managers, trying to better serve their institutional and wealthiest private clients, have been folding in OCIOs; and sponsors, confident in the future growth and demand for such businesses, are investing in them. Sellers and their clients can also benefit in those deals.

Still, Litwin demurred. “I'm not casting aspersions” about competitors, who Litwin said are strong and admirable. But none of those options suited Greycourt, which in recent years had already been plotting a different ownership succession—one with its single-family-office clients in mind.

On August 10, Greycourt announced that employees had become the sole owners and controllers. The next generation of the firm’s leadership purchased all the shares, transitioned the company into a true partnership, and began an equity rotation plan to maintain its new structure in perpetuity.

Gregory Curtis, chairman emeritus and founder of Greycourt, started the Pittsburgh-based company in 1988. Several years later, it raised some money from the Hillman Company, a more-than-a-century-old family firm that over decades transformed the energy, real estate, finance, healthcare, technology, and media and telecom industries. (Among Hillman’s investments, it was a partner in Kleiner Perkins’s first venture capital fund and a founding investor in KKR in the 1970s.) Friends, family and some early employees also invested in Greycourt at the time.

Not much fundamentally changed after Greycourt raised capital, according to Litwin, who has worked there for 16 years. Greycourt remained focused “almost exclusively obsessively on the client experience,” helping it attract clients and grow in the decades that followed.

“At the end of the day, we weren't running it as a business in the sense of trying to think about the return on capital for the benefit of the advisors who were at the firm. And it worked. We were at, I think, a form of stasis that was healthy and normal. But over the last 10 years, it became evident that to attract and retain the best talent, to be able to reinvest in the business, and systems, and in people, we needed a different ownership structure,” Litwin said.

In the past, when Greycourt started working with a new client, shareholders—who stood to benefit more financially—celebrated, while others saw it as more responsibilities and tasks that came with little upside.

Greycourt advises on over $26 billion in assets and manages $6.6 billion for dozens of clients, including single-family offices, and consulted them about what a sale would mean for the firm and them. It feared that selling or raising money would require the company to focus on returning capital and negatively affect the clients' experience. Greycourt vaunts its 5-to-1 client-to-advisor ratio and, according to Litwin, is more willing than other firms to collaborate on and manage pieces and parts of portfolios instead of their entirety.

“The office that I'm sitting in right now in San Antonio really came from one of these very large collaborative solution engagements that we have,” Litwin said. “We are right next door to our client here, and we're working with them virtually every day. They've got a phenomenal staff, very sophisticated; people I would hire in a heartbeat tomorrow. They come in, and they talk to the analysts that are here and say, ‘I need this, I need this,’ and we say, ‘Sure.’ It's effectively a way to create a lot of leverage without them having to spend millions of dollars to attract, retain, build the systems and the people.”

Greycourt worked on the sale to the current employees for years before all the parties involved agreed on valuation and a plan for the future. Terms of the deal were not disclosed.

The principal of a large single-family office in the Midwest that supports five generations and over 90 people told Modus that Greycourt’s decision reinforced his family’s conviction in the firm. The principal, who asked not to be identified so he could speak more freely about the office’s investing, became a Greycourt client prior to the ownership changes and explored working with other boutiques as well as large banks.

“They've created a durable competitive advantage by being able to have a long-term horizon with the families that they serve, and a unique proposition being as transparent and as independent as they are,” the principal said.

Time will tell if Greycourt’s structure is successful, but it “sounds really good,” said Amanda Tepper, a managing partner at Chestnut Advisory Group, a firm that consults for asset managers and OCIOs of various sizes on their growth strategies. “It is a very cohesive, understandable, on-market story that they are telling to stay independent and to stay aligned with their clients. And now they'll have to deliver on that.”

While similar to those with asset managers, the relationships investors have with consultants and OCIOs are “more important because it's a bigger strategic partner, especially if they're taking your entire portfolio,” Tepper said. “The team that is going to be your day-to-day contact, they matter one hundred percent more than if they're one of a hundred managers.”

Greycourt has 40 employees and has already been hiring more actively. Michael Meehan joined the firm last week to become its new chief investment officer. He previously served as a senior portfolio strategist at Nuveen.

“People generally underestimate significantly what they can do over the course of a decade, and they massively overestimate what they can do over the course of a year,” Litwin said and attributed to his colleague David Wells, a managing director at Greycourt.

“There's a degree of professional grace that comes from understanding the sweet spot between those two things: being really ambitious and thinking over a generational timeframe, but giving yourself enough room. I mean, honestly, not to bring this back to our deal or anything, but we could have done this deal a year ago or two years ago, and it wouldn't have been as good and well-formed as it is today.”

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